Independent record labels have evolved so much that early mainstays, like Matador, Touch and Go, Merge, Kill Rock Stars, Sub Pop, Dischord, Teen Beat, and K, have reached near-mainstream popularity. (Or at least, they seem near-mainstream to those who don't pay a lot of attention to the real mainstream.) Where shows and record sales used to thrive from word-of-mouth and mail-order, many major independent record labels now employ separate booking, distribution, and publicity/public relations companies. Some labels even have marketing departments. That doesn't necessarily mean they've all gone corporate--most of the affiliate companies started out just as DIY as the labels--it just means that independent music is a huge, highly organized ecosystem that can only exist symbiotically.
Inevitably, this has lead to two things: One, that a band's chances of landing on a respectable, major independent label are about as likely as getting struck by falling airplane parts. Two, the number of smaller, independent labels that have sprouted to fill the void, is now roughly equal to the number of touring bands that exist in the US and Canada. Usually, however, small labels release one or two things and sputter out due to lack of money or real gumption (or the ability to release music worth listening to). So when a label puts out several releases over the course of a year, you have to recognize its seriousness.
For instance, Archigramophone Records is becoming one of Portland's strongest DIY labels. Their roster is largely experiment-based, with acts such as Strategy, Hazelrah, and Two Noises. And, they're throwing a party to celebrate their eighth and ninth releases, by Mome Raths and Nice Nice. (Both from Portland, both great, read about their music on pg 16). Archigramophone releases LPs and seven-inches, as well as these incredibly adorable three-inch CDs. They don't spend a fortune on packaging, but they still make artful covers. (And yes, I realize the packaging issue could be construed as shallow or vapid, but packaging reflects what's inside, and how often do you assume that the music within sounds like a big pile of shit if nobody put any care into the cover? I'm not asking for glossy, 10-color stuff I'm asking for "photocopied, yet legible.")
If you're thinking of starting a label, I would highly recommend talking to other label owners around town (Jealous Butcher, OMCO, Hush, Magic Marker, Slowdance, etc.) and letting them tell you exactly how much work and money is involved, and how very little glory/payoff. The way independent music works now, if you want to get your releases in stores across America, it's hard to do it without a distribution company. If a distribution company decides to accept you, they probably won't pimp your records much at the beginning, unless you are releasing obscure Black Heart Procession or maybe The Locust. That is why you must do it for the RIGHT reasons, i.e., belief in and love for the music you're releasing.